I really like GigaOm but they fell prey yesterday at the end of a piece that was for the most part accurate about Search not being a demand-gen channel to the false prophet of Social Media advertising overtaking Search. They’re in good company underestimating the upside of Search. In 2003 Jupiter predicted paid search would grow to $4.3 billion in revenues by 2008. The actual figure was $12 billion. In 2010 the worldwide market for Search ads is estimated to be $25 billion – a number that far eclipses even the most bullish estimates of 5 years ago.
From the GigaOm piece:
"Google needs to be afraid of social and what it implies…. Google needs to find ways of incorporating the social element into what it does, or risk losing attention — and by extension, potential revenue."
Outside of gaming Social is maybe doing $2B a year in ad revenue. Google will do $20B this year… just in owned Search. That's too big a delta to be "afraid" of anything.
There’s no denying that Social data is an important layer. It could potentially become the most important data layer – possibly orders of magnitude more important than the pages and link data Google predominantly uses now to power its algos. But we’re a long way from that happening.
As I mentioned in late 2009 in a piece titled Waiting to Rule the Ad World: The Next Decade Will Shift to Search the future of Search monetization is secure and enormous.
"Direct mail (already data driven) is expected to decline 39% in the next five years – from $49.7 billion in annual spend in 2008 to $29.8 billion and will shift to search. Radio dollars (half local, half national) have not even moved into Search en masse. Then there are the remaining dollars from Newspapers. Looked at a circular lately? Mobile search also has billions more in untapped potential. All these dollars hit search in the coming decade."
- YouTube is now over 25% of Google’s Search queries and for two years has stood as the 2nd largest Search Engine. It is just figuring out its revenue model.
- Mobile Search is predicted to be $5B for Google in just 2 years
- Maps/LBS/Local Search…is a market that might be $100B worldwide once it is fully captured. Local Search alone has been growing at double digits every year…for the past 8 years.
The biggest diamond of all might be the hardest to mine. There has been little to no cross-media integration between the most powerful demand generation channel TV with the most effective demand capture channel Search. Once those silos breakdown and Advertisers truly optimize cross-media we might be looking at another $50-$75B in market potential.
Still, Google has not been sitting on the sidelines with Social. The best presentation on the challenges in Social Media…dare I say ever… is from Google a few months ago. A year ago Google began experimenting with Social Search. 150 million people are active on its primary Social Network, Gmail.
As I’ve said many times in the past Search is not a channel. Search is a behavior. Our appetite for this behavior and the ability for technology to deliver against it is hardly a decade old. Unless humans get rewired or technology stops advancing there is no end in sight to the growing value of Search to people and thus the revenues and returns associated with it for Advertisers.